*The Critical Illness benefit is an accelerated benefit and the death benefit will be reduced by the Critical Illness cover paid to the policyholder. To know more about the illnesses covered, please refer the sales brochure.
**Available only under Life Plus and All in One option. Maximum amount that can be availed is 2 Crore and will be paid as a lump sum.

*The Critical Illness benefit is an accelerated benefit and the death benefit will be reduced by the Critical Illness cover paid to the policyholder. To know more about the illnesses covered, please refer the sales brochure

SIP is a financial planning tool available for policy holder’s to create wealth and achieve their long term financial goals by contributing a fixed amount in a selected fund(s) at regular intervals, which could be either monthly, quarterly or yearly. The key benefits of SIP to policy holders are rupee cost averaging and also it inculcates disciplined approach towards financial savings rather than ad hoc investment decisions.

Understanding 80C deductions of the Indian Income Tax Act

Understanding 80C deductions of the Indian Income Tax Act

Understanding 80C deductions of the Indian Income Tax Act

What is Section 80C?

Section 80C, including section 80CCC & 80CCD, prescribes combination of activities. If you want to utilize your income in some of these activities during the Previous Year (PY) you can claim the amount as a deduction from your total taxable income for the PY.

For Example:Assuming you earned a gross total income of `10,00,000 as taxable income in P.Y. 2015-16 (Assessment Year will be 2016-17 when you will estimate and pay the tax on this income). If you invest `100,000 of this income in any or multiple activities listed under section 80C, your total taxable income will be reduced to `900,000 for the P.Y.

How to avail tax deductions under Section 80C?

Activities under section 80C can be divided into two parts:

Investment Activities: You park your money in an investment for some time and then get it back.

Spending Activities: You spend your money on the activities listed under section 80C.

How much can be claimed u/s 80C?

There are limits to the amounts that can be claimed for different activities and the total that can be claimed under these activities.

The total amount that can be claimed under sections 80C, 80CCC and 80CCD(1) combined is `150,000.

There is an option to increase the total deduction by an additional `50,000 under section 80CCD. Here’s how it works:

*80CCD (1) & 80CCD(1B)

Deductible in the year contribution is made, up to 10% of the salary

Additional Deduction of ` 50,000 over and above 80C limit

Table 2: Deductions on Contribution to NPS Schemes

*80CCD (1) & 80CCD(2)

Deductible in the year contribution is made, up to 10% of the salary

Additional Deduction of ` 50,000 over and above 80C limit

Table 2: Deductions on Contribution to NPS Schemes

Note that, the deduction of `50,000 is available on NPS over and above `150,000 deduction available U/S 80C, 80CCC & 80CCD(1).

How long should you stay invested?

This is an important obligation often ignored by taxpayers while investing under section 80C, 80CCC & 80CCD. Different investment instruments have different time limits which you must followed to avoid reversal of the deduction:

Read More Related Articles

Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.

Tax benefits under the policy are subject to conditions under Section 80C, 80CCC, 80CCD, 80CCE, 10(10A), 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. The tax laws are subject to amendments from time to time. Please consult your tax advisor for details.